Solomon: Update on Elon Musk Trial - Do Plaintiffs Have a Solid Case?
How are the plaintiffs’ lawyers doing so far in the Elon Musk class action?
It would be an accurate characterization to say that they are doing a good but not great job so far.
The lawyers for the plaintiffs need to prove two things to the jury for their claim to succeed.
First, that Elon Musk deliberately deceived investors when he tweeted that he had “funding secured” to take Tesla private at $420 per share, and then followed up, mere hours later, that a deal was imminent.
Second, that the shareholders who form the legal class in this action detrimentally relied on the information in Musk’s tweets to either buy or sell shares in Tesla.
While a tired, cranky and admittedly jet-lagged Musk seemed as if he might implode at times while on the stand on Monday, by the end of the day on Tuesday he appeared far more gathered, even asking reporters, as he was surrounded by bodyguards after leaving the court, how they thought his testimony went.
Musk tried to shed some levity on the trial on Wednesday by changing his Twitter name to Mr. Tweet, in reference to one of the plaintiff’s lawyers (perhaps) inadvertently calling him by that name during Tuesday’s examination.
Changed my name to Mr. Tweet, now Twitter won’t let me change it back 🤣
— Mr. Tweet (@elonmusk) January 25, 2023
The key question we should be asking as the week draws to a close is whether the counsel for the class is satisfying their legal burden. Are they doing well enough to convince the jury that Musk knew that the information contained in his public tweets was materially false?
What the class absolutely has in its favor is the presiding judge’s 2022 summary judgment ruling in the case that the tweets at issue were “deliberately reckless” and false. That’s a very significant first step, and one that will serve to block the most common successful defenses in a case such as this — that Musk was neither reckless nor made a false statement.
As to the second prong of what the prosecution needs to show, as attorney Michael Epstein points out, it may be a somewhat easier bar to clear: “If the attorneys for the plaintiffs in this class action can prove that Elon Musk knew that the information in his tweets was materially false, showing that plaintiffs in the class detrimentally relied upon this information could reasonably follow.”
Jury trials often come down to intangibles, and here is where the counsel for the plaintiffs need to do a better job of controlling the narrative.
It’s true that having Musk on the stand has somewhat of a circus atmosphere. Love him or hate him, Musk tends to take all the oxygen in a room — even a virtual room, such as Twitter — and a courthouse is no different.
Musk isn’t expected to spend more time on the stand before the nine-person jury begins deliberations in around two weeks. Once the lawyers representing the class move on from Musk’s testimony, they need to present evidence in a way that will move jurors.
Jurors are real people and, as anyone who has ever followed a jury trial knows, they can be swayed by emotions as well as facts. How the facts are presented to members of a jury influences what they remember most vividly during their deliberations, which is something that the lawyers for the class should keep in mind over the coming days.
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